Of course, the American dream promises that a diligent life will be rewarded with many years of retirement, but is it really true? A study by the Pew Research Center released at the end of last year showed that for every 5 Americans over 65, one person is still working twice as much as 35 years ago. Meanwhile, according to a survey in July 2023 by Ipsos, 29% of Americans under 55 believe they will never retire. Another survey from the labor welfare research institute shows that 1/3 of American workers think they will retire at age 70 or later, or never. Indeed, contrary to what you might think, not all Americans are financially secure in their old age.

The truth is, in the world's largest economy, the group of workers over 75 accounts for a small portion of the workforce but is the fastest-growing segment.

According to the US Bureau of Labor Statistics in 2002, about 5% of people over 75 were working, but by 2022 this number had increased to 8%. It is estimated that by 2032, this figure will reach 10%, while the proportion of young workers remains stable or even decreases. But why do Americans work their whole lives? Because they enjoy their work, they don't like being idle. The answer is not as simple as that. The US is one of the countries with the highest retirement age in the world, with the earliest retirement age in the US being 62. However, according to new government regulations, those born in 1960 or later will retire at the age of 67. But what's the issue with those born in 1960 or later?

Let's revisit history for a moment. In 1945, after World War II, the US experienced a period known as the baby boom, with children born between 1946 and 1964. The baby boomers were wealthier, more dynamic, and healthier than any previous generation, creating a huge wealth for the economy and driving consumerism. On the birth rate chart, the baby boom period is the red line, you can see that the birth rate peaked in 1949 and gradually declined from 1958. By 1963, the birth rate in the US had returned to pre-boom levels, and since the baby boomers were born, this is when this generation has either entered or is entering retirement age. While they once created a massive workforce that made America prosperous, in old age they have become a huge retired army, and of course, along with millions of retirees each year comes significant pressure on the social security system.

To balance this retired army, the US needs a large workforce to replace them. However, the US population is aging rapidly. According to US Census Bureau data, the median age of the US population in 2022 reached a record high of 38.9 years. To explain further, with a median age of 38.9, it means that the US has as many people over 38.9 years old as it has younger than this age. This shows that the US population is aging unusually. In 1980, the median age was only 30, by 2000 the US median age had jumped to 35. In the following two decades, the US median age increased to nearly 39.

To balance this retired army, the United States needs a large replacement workforce. However, the US population is aging rapidly according to US population statistics. The median age of the country in 2022 reached a record high of 38.9 years. To explain further, with a median age of 38.9, it means that the US has the same number of people over 38.9 years old as those younger than this age. This indicates an unusually aging population in the US. In 1980, the median age was only 30, by 2000 the US median age had risen to 35. In the following two decades, the US median age increased to nearly 39.

The first reason for this situation is the period after the global economic crisis in 2008, the birth rate has significantly decreased compared to previous generations. The second factor is that women of the GenY generation born between 1981 and 1996 tend to prioritize education and work when they are young. This leads to them marrying later and having fewer children. The third reason is that previous immigrants, mostly working-age immigrants, usually have more children than those who have been in the US for many generations. However, since 2016, the number of immigrants entering the US has decreased, hitting a low during the COVID-19 pandemic.

Therefore, the basic situation is that the retirement population is larger than the young workforce, which will threaten the social security fund and the Medicare health program, which rely on current workers' taxes to pay for retirees. Business Insider surveyed 2700 Americans about their perceptions of the economy and retirement plans. Just over half of them answered how much money they need to have a comfortable old age, and the average figure given was $1.27 million, which is equivalent to 30 billion Vietnamese dong. However, most of them are saving less than $90,000. The main source of income for retirees in the US is from social security funds, pensions, and personal savings. However, surveys show that few people have enough from all three sources, and some have none at all. Why is that?

In the past decades, the US retirement system has seen a significant trend towards workers, more likely to enjoy 401(k)-type retirement plans rather than traditional programs. How do they differ? Traditional pensions are known as defined benefit plans, which are fixed payment plans sometimes based on the time the worker has been with the company and the amount they are paid. On the other hand, programs like 401(k) funds pay out based on the amount the worker contributes during their working years and are subject to market fluctuations.

In many decades, traditional retirement plans ensured stable retirement for workers, with the average American receiving $25,000 in annual pensions. However, increasingly popular retirement funds like 401(k)s have contributed to creating inequality. This is easy to understand because those with higher incomes tend to contribute more, so they will receive higher pensions. In other words, retirement has become a luxury only for those who can afford it, while fewer and fewer low-income families have retirement savings, partly because retirement is tied to income and contribution amounts.

Women have fewer opportunities to save for retirement than men, simply because they are often paid less for the same position. Therefore, many decide to continue working even in their 60s and 70s, partly because they are still healthy and partly to have more financial security before retiring to cover their daily expenses. A survey by the Chance America Retirement Research Center shows that nearly half of the baby boomer generation is expected to retire after 70 or even not retire at all. In recent years, everything has not gone as planned for many retirees, with COVID-19 and high inflation making retirement funds less effective.

The National Council on Aging and the University of Massachusetts Boston analyzed the financial data of 20,000 older adults in the US. Their shocking conclusion is that up to 80% of older adults in the US lack the financial resources to pay for two years of nursing home care or four years in a retirement community. Meanwhile, 60% of older adults cannot afford home care services, but having a home or being in a nursing home is already good enough. In recent years, the number of older adults at risk and currently experiencing homelessness has increased rapidly in the US.

Research from the Office of Disability, Aging, and Long-Term Care Policy Health Behavior and Health Research Institute shows that as of 2021, people aged 55 and older accounted for nearly 1/5 of the homeless population in the US. This study estimates that the group of Americans aged 50 and older at risk of homelessness will triple by 2030. More and more Americans are worried about retirement, unsure of how long their money will last. To cope with this, many seniors are returning to school to learn about retirement. An example is the University of Colorado program, which held a graduation ceremony for 17 students in its first class, half of whom are newly retired seniors. The rest are about to retire, spending over $3000 or two evenings a week for 4 months.

Students are taught how to plan and achieve their retirement goals. Not everyone can figure it all out, but the class gives them more choices and better preparation before retirement. Of course, not all older adults continue to work for a living, for many, work has truly become a passion and a motivation for life. Working in your 60s, 70s, or even older is not easy, but many see it as a way to have a new adventure every day.

Contrary to the common belief that older adults are financially secure, the harsh reality is that the American dream is much harsher for many learning how to retire properly and continuing to work with an accepting mindset may be the best scenario for the path that many Americans will have to take, especially as the US population is aging and social security is becoming increasingly uncertain. The elderly who cannot retire in the US are a story far removed from the much wealthier Vietnam. But it will certainly make us think more about our own future.

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